Kampala, Uganda | THE INDEPENDENT | New and emerging financial technologies offer opportunities and risks to the banking sector, making it necessary for financial institutions to re-engineer their business models, Bank of Uganda governor said on Tuesday.
The digital revolution has offered opportunities for financial inclusion and a wider suite of financial products and services, regardless of income and location, Tumusiime Mutebile, governor of the Bank of Uganda said at the Annual Bankers’ Conference.
The digital revolution has also led to a dramatic reduction in the operational costs and improved efficiency in financial services, he said, adding there are risks that the banking industry has to contend with.
While the transformation may polarize the market by excluding those segments with low levels of digital and financial literacy, the growing use of technology to capture, store and analyze data, consistent with the fourth industrial revolution, increases the risk of data misuse and privacy violations, the governor said.
An increasing reliance on technology solutions and third party service providers also increases operational risks, including cyber-security and money laundering risks, he said.
As a result, “financial institutions have had to re-engineer their business models and adopt new and more efficient business operational frameworks in order to ensure not only the seamless accessibility of financial services, but also their continued sustainability,” he said.
“In Africa and the East African Community, while we still lag behind in the utilization of financial technology, the phenomenal growth in mobile money services has been critical in increasing the financial services outreach, which is crucial for poverty eradication and inclusive economic growth,” he said.
Mutebile said Uganda has implemented a number of initiatives to provide an enabling and regulatory environment for digital transformation.
He noted that Uganda’s government has set up a national taskforce on the fourth industrial revolution, which has formulated a draft strategy on policy interventions.